5 Debt Tips for Women
Women tend to be smarter than men when it comes to patience and staying out of debt. But many are still struggling with insoluble debt due to single parenthood, sudden widowhood or poor money management skills.
One of the biggest mistakes that women often make is becoming financially dependent on their husbands. It not only makes them vulnerable both emotionally and financially, but also exposes them to greater risk of bankruptcy. Here are some ways that women can take back control of their financial life and beat debt.
1. Simple Living
Anyone can live within her means. Avoid credit and use cash whenever you can. If you use a credit card, only charge the amount that you can afford to pay back in full. It isn’t easy to spend less, but make an effort to avoid impulse purchasing as much as possible.
2. Financial Goals
Get a realistic picture of your current financial situation and set some achievable financial goals such as funding your retirement, making a proper budget plan and an adequate emergency fund. If you are married, don’t overlook your family's financial decisions. You are just as liable for the family's debts as your husband.
Make a list of debts and corresponding monthly payments, along with the interest rates you pay for each of them. Prioritize your debts according to due dates, balance and interest rates. You should pay the debts with highest interest first. Once you calculate the family’s cash inflow and outflow, you can set your priorities. Decide whether to repay your credit card debt, make more investments, finance your children's education or build your savings first.
3. Develop a Financial Strategy
Paying off your entire debt might take you years but every step you take brings you closer to your financial goals. If you are juggling multiple debts, you can consolidate your existing debts and pay them with a single payment at a lower interest rate.
4. Credit Card Debt
You need to establish a separate credit history of your own, even if you share accounts with your husband. If you end up divorced or widowed, you have to manage financial matters yourself.
Go slow in taking on credit cards and limit yourself to just two or three. Make sure, before you opt for a new credit card, that you fully understand the terms and conditions of the contract. Just pay your bills on time and keep your credit card balances manageable.
Saving seems out of question when you are in debt, but you neglect to do so at your peril. I recommend that you contribute 10% of your family income to an emergency fund or a retirement fund to ensure the future security of your family. To save more, you can curtail on entertainment spending or do some of the odd household jobs like gardening or cooking or babysitting for extra cash.
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Kimberly J. Howard, CFP, CRPC, ADPA is a Certified Financial Planner and the owner of KJH Financial Services, a Fee-Only practice located in Needham, Mass. (781-413-4879). Please visit us at www.kjhfinancialservices.com or email Kim at email@example.com.
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